ATN Infratech Private Limited vs DCIT

PER MADHUMITA ROY, J. M.:

The instant appeal filed by the Assessee is directed against the order dated 30.05.2025 passed by the Ld. Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as the Ld. CIT(A)/NFAC] under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) arising out of the Penalty Order dated 03.02.2022 under Section 271(1)(c) of the Income Tax Act, 1961 ('Act' for shot) for Assessment Year 2013-14.

The case of the Assessee was selected for scrutiny under CASS and an assessment order under Section 143(3) of the Act was completed on 07.03.2016 determining the total income at Rs. 55,37,870/-, claim of expenses to the tune of Rs. 7,13,859/- was added to the total income of the Assessee and penalty under Section 271(1)(c) of the Act was initiated. In-fact notice under Section 274 r.w. Section 271(1)(c) of the Act dated 08.11.2021 was issued, a copy whereof as appearing Page 15 of the Paper Book filed before us, the contents whereof is as follows:

The Assessee joints issue to this effect that since the notice under Section 271(1)(c) does not specify whether there is any concealment of income by the Assessee or furnishing of inaccurate particulars of such income, the said notice is not valid in the eyes of law and, therefore, liable to be quashed. Consequently, the assessment is void ab initio and thus, liable to be set aside.

The above was the crux of the submissions made by the Ld. AR at the time of hearing of the matter. On the other hand, the Ld. DR relied upon the order passed by the authorities below.

The proceeding initiated under Section 271(1)(c) of the Act was ultimately culminated in the order imposing penalty of Rs. 2,20,583/-which was further confirmed by the First Appellate authority and hence, the instant appeal before us.

In this regard, we have considered the Judgment relied upon by the Ld. AR in the matter of CIT Vs. Manjunatha Cotton and Ginning Factory, reported in 359 ITR 565 passed by the Hon’ble Karnataka High Court, wherein it has been held that sending a printed notice without striking off the relevant portion is impermissible; the Assessee should know the exact charge, and further that penalty proceeding initiated on one limb and imposed on another limb are invalid. It was categorically observed therein that concealment of income and furnishing of inaccurate particulars are different charges requiring separate consideration. Non specification of the charge in the notice is a fatal flaw.

It is the settled principal of law that if a notice under Section 274 r.w. Section 271(1)(c) does not specify the limb under which the penalty proceeding is initiated either for concealment of particulars of income or for furnishing inaccurate particulars of income, the same is invalid and renders the entire penalty proceeding void ab initio, and, thus, liable to be quashed. In that view of the matter, considering the entire aspect of the matter when the impugned Notice under Section 274 r.w. Section 271(1)(c) dated 13.06.2016 without specifying that the Assessee has concealed the particulars of income or furnished inaccurate particulars of income rather both of them has been mentioned without striking off any of the charges levelled against the Assessee, the impugned notice is found to be bad in law, invalid. The penalty proceeding is void ab initio and thus, quashed.

In the result, Appeal filed by the Assessee is allowed.